University of Minnesota braces for financial hit amidst COVID-19 pandemic
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University of Minnesota leaders are expecting a significant financial hit as the COVID-19 pandemic continues, which will affect both students and staff.
The Landscape Arboretum, Bell Museum and Northrup building are currently closed, athletic events have been canceled, and the future of summer camps at the U of M is uncertain.
“All of those things are really revenues that we project could be lost and not replaced,” said Senior Vice President Brian Burnett.
He joined President Joan Gabel and other University leaders during a remote Town Hall for students and faculty on Tuesday afternoon.
Burnett outlined three possible scenarios. The best case would be if summer and fall activities return to normal, which would result in an estimated $75 million loss in revenue.
University of Minnesota leaders are expecting significant revenue declines as the COVID-19 pandemic continues, which will affect both students and staff.
“It doesn’t look like that’s going to happen each day that we stay in the current status that we’re in,” said Burnett.
The moderate case adjusts for reduced operations throughout the summer but returning to normal by fall. In that situation, the University expects to lose about $160 million in revenue.
In the worst-case scenario, Burnett said operations would be disrupted into the fall semester. That could cost the University $315 million or more in lost revenue.
“This is spread over two fiscal years, the current one we’re in and the next one as well,” he said. “We’re working tirelessly to find the solutions to keep this University excellent.”
University leaders also project that in the worst-case scenario, the number of high school seniors heading to campuses in the fall could drop more than 20 percent. There could also be reductions in the number of students returning to or transferring into the system.
“It’s enormous but also only a projection,” said Gabel, reacting to the projections. “It is going to be hard, it will not be fun what is coming up for the next few months but we were in very good financial strength when this started.”
There has been some relief for students.
Earlier this month, the Board of Regents approved refunding the housing and dining fees students have paid since March 28.
On Tuesday, the Board extended the start date of that Comprehensive Student Fee Refund Plan. Students will now be credited back to the day classes resumed after spring break.
The extension will cost the U of M about $7 million, bringing the total cost of the plan to $35 million.
University leaders outlined how they will offset the financial hit from COVID-19.
President Gabel and her cabinet will take a voluntary 10 percent salary cut starting on July 1 and continuing until they return to normal operations. About 200 University senior leaders will take a week of unpaid work before June 30.
A salary freeze on merit increases and other adjustments during the 2021 fiscal year for all University employees system-wide is also being considered, subject to Board of Regents approval.
The University expects these changes could save about $40 to $50 million.
“We know every decision we make affects lots of people’s lives,” said Gabel.
University officials didn’t give specifics on potential employee and staff changes. There is currently a hiring freeze in place.
“It challenging to predict six months into the future,” said Ken Horstman, the interim vice president for human resources.
During the town hall, he said they are working to keep pay and benefits intact for as long as possible.
“It is critical to retain our faculty and staff in a local and national job market that has more job opportunities than those seeking an opportunity,” said Horstman. “The University had this commitment prior to the crisis and will strive to retain our faculty and staff during this crisis and afterward. We are going to face critical decisions in the coming months and this will be challenging and difficult decisions will be necessary.”
Meanwhile, Gabel said there is no timeline for when students could return to the classroom. Summer learning will be done remotely.
“A lot of you want to know what happens this fall,” she said. “I would like to know what’s going to happen this fall too.”
A task force is currently working on how to provide graduating seniors with a commencement ceremony. Gabel expects there will be an announcement this week or next week.
“We would have virtual celebrations in late spring around the time we would normally have celebrations,” she said.
They are looking at the possibility of another ceremony in the fall.